Devender Singh Choudhary on LinkedIn: Corporate actions impacting the Net Asset Value(NAV): Corporate actions… (2024)

CORPORATE ACTION are crucial events that impact the structure and ownership of a company, often influencing its stock prices and overall value. These actions can be both planned, such as mergers and acquisitions, or unplanned, like bankruptcies. In this article, we will explore various types of corporate actions and their implications for investors.Mergers and Acquisitions (M&A):M&A activities involve the consolidation of companies through mergers or the purchase of one company by another. These actions can lead to changes in management, business strategies, and market position, affecting the value of stocks.Dividends:Dividend payments represent a distribution of a company's profits to its shareholders. While they can be a source of income for investors, changes in dividend policies can signal shifts in a company's financial health and stability.Stock Splits and Reverse Splits:Stock splits increase the number of outstanding shares and decrease the stock price proportionally, making shares more accessible. Reverse splits have the opposite effect. These actions don't impact the overall value but can affect liquidity and investor perceptions.Rights Issues:Companies may issue rights to existing shareholders, allowing them to purchase additional shares at a discounted price. This can be a way for companies to raise capital and can impact stock prices as investors react to the dilution effect.Bonus Issues:Bonus issues involve issuing free additional shares to existing shareholders, often as a result of accumulated profits. While this does not change the overall value of the investment, it can affect market sentiment and liquidity.Buybacks:Share buybacks involve a company purchasing its own shares. This can signal confidence in the company's future and improve earnings per share. However, it may also indicate a lack of investment opportunities or financial challenges.Spin-offs:Spin-offs occur when a company divests a portion of its business into a separate entity. This can create value for shareholders, but it also introduces new investment considerations related to the spun-off entity.

8

Corporate Action Definition – Any event that give material change to the company, it is a initiation by a company that effects the company debt and equity.Types of corporate action 1)Mandatory corporate action – It is a type of corporate action that effect all the stakeholder of the company and the participation is mandatory in this type of corporate action.Cash dividend – The distribution of company profit to the qualified shareholder as directed by the board of director.Stock split – There are two type of stock split forward and reverse stock split.Forward stock split - This is a type of stock split in which company think that its stock price is very high and not affordable by the investor so they split the company stock into small number of stocks, the company total outstanding share is not affected and also the total market cap. This result in reduce the price of the stock.Reverse stock split – This is a type of stock split in which the company converse the stock into a small number of stocks, the company think that the price of the stock is very less and cannot be touch by the investor, so they converse the stock into a small number of stock thus increase the price of the stock. This dopes noy effect the total number of the outstanding share and also the total market cap.Bonus issue – It is a type of corporate action in which company announce additional share to the existing share holder without any cost without affecting its total market cap, it is not given in the form of dividend but as a free share.Pari-passu – It is a type of corporate action in which all the shareholder has an equal right whatever is considered in the action. Such as all the common share holder will have the equal right in case of dividend.Spinoff – It is a type of corporate action in which the company separate a unit into a separate unit as a independent company.2)Voluntary corporate actionTender offer – The corporate may request to tender there share at a pre – determine price, the share holder has a right whether or not to take participation in the action. The shareholder sends their request to the corporate agent and in return the corporate agent will send the response to those who have taken participation. In tender offer the bidder contacts the share holder directly, inviting them to sell there share at a pre – determine price.Rights - It is a type of corporate action in which the company offer the existing shareholder some additional share at a discount price.Dividend can also be considered as a corporate action as the shareholder can take the dividend in the form of cash or additional share.Buy back – It is a type of corporate action in which the company redeem its outstanding share from the market, the company dop this by thinking that to increase the price of the share and to reduce the threat of the shareholder who is looking for a controlling stake.

What Should Investors Know Before Entering Into the World of IPO Financing?One of the first things that investors should know before entering into the world of IPO financing is the documents required for an IPO. This is essential because the documents not only give investors insight into the company’s business model and financials but also provide information about the risks associated with the investment. For more information check out this: https://lnkd.in/gpESfxpV

I wanted to provide you with a brief explanation of how the T plus one settlement cycle will impact corporate action and dividend processing.With the implementation of the T plus one settlement cycle, the time it takes for securities trades to settle will be reduced from the current T plus two cycle to just T plus one. This means that trades executed on a particular day will settle one day after the trade date.In terms of corporate actions, such as stock splits or mergers, the shorter settlement cycle will allow for a quicker processing of these events. Shareholders will receive their entitlements sooner, minimizing any delays or be uncertainties associated with the corporate action.Similarly, the dividend processing will also benefit from the T plus one settlement cycle. Shareholders will receive their dividend payments in a more timely manner, as the settlement will occur one day earlier compared to the current cycle.Overall, the transition to the T plus one settlement cycle will enhance the efficiency and speed of corporate action and dividend processing. It will streamline the overall market operations and provide shareholders with faster access to their entitlements. Fail control will be essential and will need to be monitored very carefully to reduce claims and entitlement issues. Please feel free to reach out if you have any questions or require additional information.

3

If it’s time for a change, but you’re not quite ready to sell, evaluate other options. Determine whether an employee Stock Ownership Plan (ESOP) is feasible, or selling a percentage of the business to a private equity fund or a leveraged recapitalization might be viable alternatives.

If it’s time for a change, but you’re not quite ready to sell, evaluate other options. Determine whether an employee Stock Ownership Plan (ESOP) is feasible, or selling a percentage of the business to a private equity fund or a leveraged recapitalization might be viable alternatives.

The asset manager selection process can be a strenuous process for investors. With the right criteria, however, it can aid the beginning of a growing long-term partnership. Kasief Isaacs, an investment specialist in private equity and the private credit space, provides us with a few tips on how to streamline this process.#privateequity #investment #assetmanagerselection #privatecredit #mergence #creationcapital

12

The start of a new financial year usually brings about the excitement of receiving your dividend payouts. With that in mind, have you ever considered opting for a dividend reinvestment plan? Read about how it works and why it may be beneficial in the article below.https://lnkd.in/gMGt2kn7#Investing #ASX #Dividend #DRP #Compounding

5

##Term_of_the_day_Asset_Servicing :Asset servicing functions begin after settlement and are performed for as long as the investor owns the security. The brokers and custodians holding the investor’s assets conduct many of these asset-servicing functions. We will be looking at Income Collection (dividend and interest collection) and Corporate Actions (mandatory and voluntary actions). Income collection can be of two types: · Dividend Collection · Interest Collection Any action that changes the capital structure of a firm is a corporate action. Conceptually these actions are easy to understand. The difficulty arises in processing their details and errors are very expensive for firms to correct as they may involve a financial loss for the investor that the broker / custodian has to cover. • Corporate actions can be of two types: • Mandatory actions: A mandatory corporate action is one where the issuer has the right to insist that the corporate action takes place. The action is therefore mandatory for the investor. The actions that will be covered here are: · Mergers · Acquisitions · Stock Splits · Reverse Stock Splits · Calls & Redemptions · Spin-offs · Dividends • Voluntary actions: A voluntary action on the contrary is one where the holder of the security has the right to decide whether to accept or reject the proposed corporate action. The topics that will be covered in this are: · Optional Convertible Bonds (Conversions) · Tender Offers · Warrants · Put Options ##Asset_Servicing##Corporate_actions##Voluntary##Mandatory

58

3 Comments

Corporate Stubs refers to a class of contingent or residual interest in a company. They come into being because of a merger, acquisition, liquidation or reorganization. They are also known as minority interests, certificate of beneficial interests, certificate of participation, certificate of contingent interest, receipts, scripts, or liquidation certificates.Corporate Stub CategoriesAll types of corporate stubs can be classified into the following three categories.1. Fixed asset stub2. Participating asset stub3. Fluctuating asset stubClick on below link to know more.#corporatestubs #Fixedasset #insterestrates #trading #financecareers